The Pros and Cons of High Yield Checking Accounts

PHOTO: A contest encourages tax-filers to save their tax refunds.Getty Images
A contest encourages tax-filers to save their tax refunds.

Here's an idea for saving --or making-- money that's so old school you may never have thought of it: a high interest checking account. Now, in the world of checking, "high interest" means 1.64 percent, which doesn't sound like much. But get this: that's 33 times the national average, according to

The financial website surveyed 56 high-yield checking accounts and found 1.64 percent is the average interest rate among them. The highest was just over 3 percent! Compare that to the average interest rate of .05 percent among regular checking accounts, and you might be tempted.

One survey showed the average checking account balance in America is just over $3,000, so let's use that figure and do the math. That means you'd make $49.20 in interest over the course of a year in a high-yield account. If that doesn't excite you, consider this: you'll make only $1.50 in interest in a regular checking account!

If you stash more money in your checking account to cover your expenses, it starts to sound like real money. Let's say your average balance is five times more --$15,000. Then you'll make $246 in interest compared with $7.50.

I used the figure $15,000 for a reason: most high-yield checking accounts have a balance cap. The 14 that offer the very highest interest rates cap balances at $15,000.

"Savers looking to maximize interest earnings on these accounts must do more than pursue the highest-yielding offer," said Greg McBride, of "They also need to factor in the balance cap on which that higher yield is paid."

These high-yield checking accounts have other requirements, according to Bankrate. Be prepared for things like:

• Electronic rather than paper statements

• A minimum number of debit card transactions per month

• Requirement to use direct deposit for your paychecks

• Automated bill payments

Sound like something that would benefit you? In that case, here is a link to's full survey, which details which banks offer what.

And here is another resource for finding high yield checking accounts.

And, while you're at it, you might want to bling out your savings account. This site shows you banks and credit unions that offer higher interest savings options.